Recommendations for Best Home Loan with Offset Account

brainactive on 02/02/2019 - 10:59
Last edited 02/02/2019 - 11:37

Looking for recommendations on the best home loan.

My list of priorities (in order of importance) are:
1. Has an offset account
2. Lowest rate (after taking into account all fees etc)
3. Reputable (minimal delays during the entire house purchase process)
4. Good ongoing customer service (simple and intuitive UI, easy to set up and resolve issues)

Any other advice also appreciated. Also do most people get an Owner Occupied loan even if they intend to rent out for a few years (because they usually have lower rates)? And for those that have recently got a home loan, what comparison rate did you achieve?

EDIT: My current research indicates the following have lowest rates. The Big 4 banks seem overpriced at over 5% for offset account - how much scope is there to negotiate these down and how much better is the bigger name brands compared to the below? I'm tempted by the low rates but given I don't know much about these brands, I'd like to know more about their relative worth compared to the bigger brands (e.g. how likely are the smaller name brands to jack up rates further down the track compared to the bigger banks)

  • SCU My Life Variable Rate Home Loan 3.63%
  • State Custodians Low Rate Home Loan with Offset 3.68%
  • Mortgage House Advantage Home Loan 3.68%
  • Loans.com.au 3.74%
Financial Home Loan

Comments

  • websterp on 02/02/2019 - 11:22
    +1

    With the research you've done what are the loans/lenders you have found so far?

    • brainactive on 02/02/2019 - 11:37

      See edit in my OP. So far research won't tell me what happens after taking up the loan. For example:

      Loan A: 3.6% to new customers
      Loan B: 3.8% to new customers

      What if 6 months later, there's a rate rise and Loan A goes up to 5% whereas Loan B goes to 4%.

      How do I know which banks will do something sneaky like Bank A and which ones are likely to be more stable?

      • MrBear on 04/02/2019 - 09:40
        +1

        How do I know which banks will do something sneaky like Bank A and which ones are likely to be more stable?

        And will someone please tell me the next set of lotto and powerball numbers whilst they are at it?

        • naritas on 04/02/2019 - 10:26
          +1

          @MrBear LOL - funny but true. Given the number of factors at play, it verges on impossible to get this prediction right to the basis point (or even to 25 basis points). That said, the time proven adage "if it looks too good to be true, then it probably is" will ring true pretty much without fail.
          How to tell if it looks too good to be true? Any variable rate being offered well under 4% right now (especially by a bank). In our experience, nearly all variables are verging to towards the 3.9x%p.a. mark within a couple of years..so when you see a rate 3.7%p.a. (or less) assume it is a promo rate and, as a consequence, price in your need to leave in a year or two if you feel that you will see no value in the financial instution at a more a realistic rate for the market.

          @BrainActive By definition variable rates will vary. The only way to reliably avoid surprises is to take a fixed rate. In fact, 2 & 3 year fixed rates can include 100% offset accounts and be priced extremely similarly to variable rates (if you know where to look). Also, as mentioned above, being realistic about whether the rate quoted at day one sounds like such amazing value compared to the rest of the market that it is suspicious is an excellent clue.
          Fact is, ceteris paribus, if you want a cheap rate that will stay cheap, the following factors usually need to be accepted (ceteris paribus):

          1. credit criteria will be tough
          2. the product and/or service will be likely to be below average
          3. the processing times will usually be slow.

          That said, not all other things are equal. To name but one example of this, sometimes small lenders are desperate to grow certain facets of their loan book (again, be mindful of the need to factor in exit costs). Hence why forums like this and people like finance brokers can all be worth your time in the process of forming your own opinion.

          Hope this helps.

  • bohn on 02/02/2019 - 11:27

    probably easier to read through https://forums.whirlpool.net.au/thread/2596178?p=102
    a lot more info there than you will get in response to your Q here.

    • brainactive on 02/02/2019 - 11:42

      Thanks for the link. The more the better, so I'm hoping to hear responses here too if possible.

  • nocure on 02/02/2019 - 13:11
    +1

    My vote goes to State Custodians, great service and quick responses to emails and phone calls. Recently refinanced 3.68%, offset, redraw, no fees.

    • brainactive on 02/02/2019 - 13:41

      Have you been hit with your first rate rise yet?

      • nocure on 02/02/2019 - 14:02

        Nope, but rate is not that important, only changed to get the offset

        • Ughhh on 02/02/2019 - 14:14

          How long ago did you refinance?

        • brainactive on 02/02/2019 - 17:03

          Curious why rate is not that important for you

          • nocure on 02/02/2019 - 18:51
            +1

            @brainactive: Only 21K to go

            • SBOB on 02/02/2019 - 19:10

              @nocure: So why refinance with only 21k balance?

              • nocure on 02/02/2019 - 19:38

                @SBOB: Offset with 130K

                • Sofie519 on 02/02/2019 - 20:33

                  @nocure: If you dont mind me asking, why would you offset - 21k balance with 130K offset? Offset accounts by nature, are non interest bearing, so any monies held in the offset account above the 21K will not earn any interest. In otherwords your losing out on interest earnings from the 109K you have sitting in offset.

                  If you wanted to save interest without an offset account, You could have simply paid the balance into your loan account, without discharging the loan. Then redraw as needed, so you dont need to go through the paperwork for finance again. Use it like a line of credit of sorts with low rates as needed. As an example, this way if you needed to buy a new property, you just redraw from your existing loan without going through applying for a new loan, and the loan will continue to be secured against the existing property. Just something for you to consider next time.

                  • Ughhh on 03/02/2019 - 01:21

                    @Sofie519:

                    If you wanted to save interest without an offset account, You could have simply paid the balance into your loan account,

                    So with an Offset account, you earn 0 interest on the 130k (using nocure's example).
                    But if you put the 130k into the balance of the loan, you don't earn interest on that either right?

                    I thought the benefit of offset was to financial keep doors open eg. for tax reason if you decide to turn the house into an investment.

                    • Sofie519 on 03/02/2019 - 02:05

                      @Ughhh: I didnt say to put 130K into the homeloan. I mean, put 21K into the homeloan without discharging it. Set up an interest bearing account for the remainder 109K, e.g. ING at 1.8% would earn $1962pa in interest. Yes you declare an extra $1962 on your taxable income.

                      Each to their own, however if I read "Nocure's" response correctly, he recently deliberately went through the process of refinancing a 21K loan because he can offset it with 130K? Unless he meant he has a 151K loan, and is only paying interest on 21K because it is being offset against 130K? idk.

                      • Ughhh on 03/02/2019 - 02:09

                        @Sofie519: When refinancing, do banks only do calculations on the balance on the loan, or balance + amount in offset?

                        • Sofie519 on 03/02/2019 - 02:27

                          @Ughhh: When refinancing, you apply for whatever you want and is eligible for. e.g you can refinance up to the 80%LVR of your property again if you wanted, as long as you can service it and you can justify the cashout.

                          Offset accounts are treated as savings accounts, the balance of the loan account regardless of offset is the amount on the cheque that the incoming lender needs to write (plus fees/costs etc).

                      • nocure on 03/02/2019 - 15:15

                        @Sofie519:

                        Unless he meant he has a 151K loan, and is only paying interest on 21K because it is being offset against 130K?

                        Correct, apologies for the confusion.

    • SBOB on 02/02/2019 - 18:50

      I went with state custodian over a year ago and left not long after as the rose rates for no reason and had no interest in keeping me.

      Moved to homestar and saved some $

  • kusama on 02/02/2019 - 13:33

    See if your work has any banking benefits, mine has a partnership with HSBC. 3.6 with offset, 3.55 without. No fees

    • brainactive on 02/02/2019 - 13:41

      What it you change companies? Do you maintain rate?

      • kusama on 02/02/2019 - 13:43

        I’m not going to tell them if I change companies, or if I rent it out!

        Set all communications to email too.

        • [Deactivated] on 03/02/2019 - 16:00
          -2

          That's fraud.

      • dimitryp on 03/02/2019 - 10:34

        its $400 per year for the package if you dont work for a partner of theirs. And realistically, unless you have to restructure your loan and do a new application then they'd never know you switched employers.

  • bazzato on 02/02/2019 - 16:26
    +1

    over the past several years i've found that credit unions continue to have better rates than the banks. This means that they generally don't jack up (or reduce) rates more than the banks. The Canstar website is good for comparing. Ive also found credit unions are willing to remove the establishment fee if asked (usually around $600).

    In regards to saying loan is owner occupied, when it's not, an issue is that you are not going to be able to use the rental income estimate to help with lending availability. not sure of the legalities if they found out (could they claim back lost interest?)

    • p1 ama on 02/02/2019 - 19:58

      In regards to saying loan is owner occupied, when it's not, an issue is that you are not going to be able to use the rental income estimate to help with lending availability. not sure of the legalities if they found out (could they claim back lost interest?)

      Well you're clearly committing fraud by knowingly claiming things that are untrue.

  • Pungentia on 02/02/2019 - 17:34

    Very happy with Bank Australia (formerly MECU, a credit union) - great rates, excellent ethical stance and really easy once all set up. Day to day pay comes in through ING but offset and mortgage with Bank Aus

  • Sunshines bright on 02/02/2019 - 20:23

    We have been with loans.com for 2 years now. So far only a slight increase in rates, was 3.59 on day one and now it is sitting at 3.76. We do the "offset" and the only downfall is the fees ($600.00)for paying off the loan early. Considering a new loan is now sitting 3.68 for them you can see they do seem to increase the rates every year by about .10

    • brainactive on 02/02/2019 - 21:04

      Why would they charge fees for paying it off early?

      • Sunshines bright on 03/02/2019 - 21:48

        I can only guess but possibly lost interest on the life of the loan???

  • TheOtherLeft on 03/02/2019 - 09:40

    Having just left ME bank. I would say if you want good customer service then avoid ME bank like the plague. They may have good rates but their staff either don't care or have no idea about mortgages. They even tried to double charge us for fees.

  • Hector on 03/02/2019 - 10:31

    Most important: you want an offset, pick from this list: https://www.guaranteescheme.gov.au/rules/pdf/schedule-1.pdf to ensure you get government insurance on your offset account (ie loans.com.au doesn't show up on here).

    My pick: AMP. Started at 3.59% with AMP variable (<80% LTV, big mortgage, o/o, w 10 offset accounts if you want), now at 3.67% and I can't wait for interest rates to go down. Downsides are no physical branch (deposits/withdrawals from rediATMs) and payID not yet implemented.

    • bohn on 04/02/2019 - 09:28

      I think you will find the way loans.com.au and some of the others like it are set up, that if there was some issue, you wouldn't lose your money in their 'offset', but it would be put against the loan. You would lose the liquidity.

      • SlickMick on 04/02/2019 - 11:11

        Does anyone have confirmation on this one way or the other?

        I've been seriously considering moving my money from the offset onto the loan because of the fear mongering on this issue.

  • HeWhoKnows on 03/02/2019 - 11:56
    -5

    There are specialised loan comparison sites that will do all the hard work for you.
    Go there

  • SlickMick on 04/02/2019 - 00:05
    +1

    I was with homestar, refinanced to loans.com.au coz homestar was no longer cheapest.
    Latest loan I'm back with homestar again. 3.54%

    • SlickMick on 04/02/2019 - 11:12
      +1

      that gets negged why??

    • radissimo on 05/02/2019 - 12:15

      can vouch fro HSBC, obviously (as with any other bank) you can get much better rate- esp. if you have good credit/ salary. HSBC web interface got better, but app is PITA.

  • vince088 on 04/02/2019 - 15:20

    With ING direct for little over 2 years..

    Was 3.79%
    Now 3.89%

    In a few days 4.04%…. 0.15% rise

    Sigh

  • Jonski on 04/02/2019 - 23:14

    is ubank any good?

    i dont really understand the benefits of an offset account vs what ubank have

    • SBOB on 05/02/2019 - 07:44
      +1

      offset is more beneficial for current or future tax implications on investment properties (whether the house is now, or may be in the future)

  • oshin on 24/07/2019 - 12:45
    +1

    I just refinanced to HSBC and the rate has been further reduced now to 3.17.

    • BuDWiZe on 31/07/2019 - 13:24

      Nice I'm about 2 offload from BOQ who were charging me 4.3 and now I want to extend the loan they are bringing it down to 3.89 only for the existing loan and weirdly doing 3.39 for the new line for a knock down rebuild of the house these guys sound a lot better to go through

      • oshin on 02/08/2019 - 10:19

        Don't hesitate to negotiate for better deal. Business must be bad for the banks. A few days ago, Bankwest called me up to ask me if I am interested to move my home loan account to them for 3.19

        • BuDWiZe on 02/08/2019 - 15:26

          Nice 3.19 is great. Wonder if that happens s with offset ? Might give bank west w call

  • Hector on 25/07/2019 - 08:50

    AMP is 3.24% for me now on o/o p+I

  • randomthought on 31/07/2019 - 14:35

    Beyond Bank (formerly called CPS Credit Union) is 3.47% (it reduced from 3.64% on 23rd July), been with them a couple of years now.
    Does the HSBC one mentioned above include an offset account? I couldn't see on the website anything that said it did.

    • oshin on 05/08/2019 - 08:58

      No offset account with HSBC but you can have redraw. The product is called Home value loan. They're advertising at the moment for 3.27% but I told them if they don't give me a good rate, I would move. Maybe I am in the honeymoon period now as I just moved to them. Who knows when they'll jack up the rate. You need to keep them on their toes.

  • kley78 on 02/10/2019 - 17:13

    Any updates for this topic??

  • randomthought on 03/10/2019 - 09:47

    Ubank are 2.84% from 29th Oct (3.09% currently)
    Beyond Bank are still 3.47%
    HSBC are still 3.19%

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